Realty analysts predict that Dubai’s real estate sector, which dominated over half of the GCC’s transactions valued at $171.6 billion in 2023, will maintain its stronghold over the region’s thriving real estate market throughout 2024.
Analysts from Kamco Invest suggest that leading developers, particularly in Dubai and Riyadh, with robust liquidity, can swiftly adapt to introduce suitable product types to the market. However, they caution that the real estate supply across most segments in the region could become susceptible to broader market challenges in 2024.
In their GCC Real Estate Update, Kamco asserts that residential developers in Dubai and Riyadh, boasting strong brand equity and offering attractive product mixes alongside market-sensitive payment plans, can expect favorable sell-through of their new launches in the build-to-sell (BTS) portfolio. They also anticipate continued strength in office markets in Dubai and Riyadh as they vie for regional headquarters (RHQ) market share, with limited supply of new Grade-A office spaces from developers.
Kamco further notes that super regional malls and community-linked malls in key markets are likely to witness strength in late-cycle trends, achieving higher occupancy rates and effectively mitigating tenant portfolio risks. Additionally, they predict sustained demand and limited supply for specialized warehouse spaces in the industrial warehouse market, leading to increased rents and widening the rental gap with lower-quality spaces.
According to CBRE, a renowned real estate expert, the GCC currently has $1.36 trillion worth of real estate projects planned or underway, with Saudi Arabia holding the majority share at 64.5%, approximately $877 billion, and the UAE accounting for 21.6% of these projects.
In the first ten months of 2023, the GCC witnessed $171.6 billion in real estate sales transactions, marking a 21.1% increase from the same period in 2022. Dubai contributed 52.1% to the region’s total transacted value, partially mitigating the downturn in other significant markets like Saudi Arabia, Qatar, and Kuwait.
Dubai’s real estate transaction value surged by nearly 57% year over year throughout the first ten months, driven by aggressive pricing strategies by leading developers and high demand for luxury off-plan properties and single- and multi-family homes priced above Dh5 million. Similarly, Abu Dhabi saw a 56% increase in transaction value in the initial three months.
Despite developers’ high pricing, investors continued to find value in the market’s premier real estate products. The average value per transaction for GCC real estate achieved between January and October 2023 rose by 22.1% year over year.
Off-plan transactions in Dubai maintained robust momentum, with volumes increasing by over 40% between January and November 2023 compared to the entire year of 2022. Analysts observed a healthy 9.8% increase in the average off-plan value per transaction from the end of 2022.
The GCC real estate market is projected to reach a total value of $4.43 trillion in 2023, with a compound annual growth rate of 2.65% through 2028, reaching a market volume of $5.05 trillion, according to data from Statista.
The UAE and Saudi Arabia are driving this regional surge, with the real estate industry contributing 5.5% of GDP in the former, aiding in economic diversification. CBRE’s “2023 Middle East Real Estate Market Outlook” indicates that price growth in Dubai and Riyadh has significantly surpassed the regional average, with the UAE being the only market in 2022 to witness increases in both prices and transaction volume across all cities and industries.
